The number of
students in public schools — and the dollars tied to them — are on the decline
as families leave Michigan in search of employment. Compounding the problems
for school boards and administrators are rising costs, most of which are tied
up in labor. There is a lot at stake for school employees, students, parents
and taxpayers, so it's not surprising that the money-related debates become
fertile ground for school funding myths to take root.

The funding
mechanism for Michigan's public schools is excruciatingly complex. It includes
money from local, state and federal sources, some of which arrives via a
state-controlled distribution formula, and some from local property taxes,
special "categorical" programs, borrowing or grants. Matters that might seem
simple — like how much money different districts receive, how the amounts differ between
them and where the money comes from — are in fact hard to decipher.

Rather than embrace reforms that would help educate children more effectively and efficiently, school employee unions routinely block reform and instead demand more money.

For example,
there are numerous misconceptions surrounding the "foundation allowance," the
largest single school funding component. Since the state Legislature controls
the exact amount each year, the political battles surrounding it get the most
attention, leading many to believe that this is the schools' only revenue
source. Legislative control also gives the perception that the "foundation
allowance" is a grant from the state to each district. In reality, it's a
complicated formula that includes both local and state revenue sources.

Some myths are perpetuated by groups that
perennially call for "equal" and "stable" funding. That drumbeat fosters the
impression that current funding is neither. Strictly speaking, funding is not
equal — and never will be. Not all communities or student populations are the
same, and funding levels cannot be separated from how well (or poorly) the
state is doing as a whole. Michigan's public schools, however, are more equally
funded today than they've ever been, and the mechanisms to collect and
distribute the money have proven remarkably stable, especially compared to
nearly any other public- or private-sector institution.

Other myths
abound. When voters approved Proposal A in 1994, the largest single revenue
source for the system became a statewide 6 percent sales tax, rather than
local property taxes. When a district's revenues don't keep up with rising
costs, reliance on the sales tax is often blamed. Yet even after the shift, the
sales tax still contributes only about 20 percent of total public school
revenues.

Similarly, the
role of the lottery is often misunderstood. In its marketing, the Michigan
Lottery loudly trumpets its contribution to education, but this money amounts
to less than 4 percent of the complete school revenue pie. An upsurge in
federal revenues since 2002 has reduced the relative proportions of both the
sales tax and the lottery ingredients of that pie.

Myths about
revenues and expenses are often perpetuated by self-interested special
interests groups. Rather than embrace reforms that would help educate children
more effectively and efficiently, school employee unions routinely block reform
and instead demand more money.

In fact, as a
group, school employees have been remarkably insulated from the "lost decade" of
Michigan's ongoing recession. That doesn't stop the Michigan Education
Association union from making claims that concessions by its members have saved
taxpayers $1 billion over the last three years. In fact, employee compensation
was higher in 2008 (the most recent year for which data is available) than in
2006. Relative to the incomes of the population that supports them, the average
Michigan teacher's salary has been the highest in the nation from 2003 to 2009.

Even
assumptions that seem intuitive are
mythical, like the idea that smaller classes produce better results. At best,
the research on this is mixed. The quality of the teacher at the head of a
classroom matters much more than the number of students in it. Moreover,
Michigan has more school employees per student than ever before, yet objective
achievement measures haven't budged.

The following is
no myth: The outsized political power of the state's largest school employee
union has contributed to a vicious cycle of ever-increasing costs, leading to
an unprecedented prospect for Michigan residents: In the near future we may not
be able to afford the public school establishment as it is currently constituted.

We face critical
decisions on how best to allocate scarce resources to provide learning
opportunities for our children. We can't make sound decisions without
dispelling the myths that surround school funding.

#####

Michael Van Beek is director of
education policy at the Mackinac Center for Public Policy, a research and
educational institute headquartered in Midland, Mich. Permission to
reprint in whole or in part is hereby granted, provided that the author and the
Center are properly cited.

ISSN: 1093-2240,
SKU: V2010-28

SummaryPublic school funding in Michigan is complex, often generating myths about how the various pieces fit together. An ongoing series by Mackinac Center Education Policy Director Michael Van Beek examines these myths and separates fact from fiction.